BP to Pay Largest Fine Ever for Gulf Oil Spill

After flooding the Gulf of Mexico with 206 million gallons of crude oil two years ago, London- based oil conglomerate BP has agreed to pay a $4.5 billion settlement to the US government.

The oil spill was the largest environmental disaster in US history and the fine will match. It is the second record settlement that Eric Holder’s Department of Justice (after reaching a settlement for $25 billion with five banks over the improper foreclosures during the housing crisis) has netted and this time it will come with criminal penalties as well.

The oil giant said in a statement today that it also agreed to plead guilty to criminal charges including 11 felony counts of misconduct related to the deaths of 11 men in the rig explosion that triggered the oil spill. It also agreed to plead guilty to one felony count of obstruction of Congress.

An unnamed source with knowledge of the settlement told the Associated Press that two BP employees will also face manslaughter charges over the deaths of 11 people in the explosion of the Deepwater Horizon oil rig that triggered the massive spill.

The $4.5 billion settlement is the largest in history, more than three times more than the $1.2 billion fine drug maker Pfizer was hit with in 2009, that had previously been the largest ever. It is also significantly more than the cost of the Exxon Valdez spill in 1989. Exxon settled with the U.S. government for $1 billion, which would be about $1.8 billion today.

The settlement payment will come over five years and includes almost $1.3 billion in criminal fines, also the largest such penalty ever, to go along with payments to several government agencies.

“We believe this resolution is in the best interest of BP and its shareholders,” said Carl-Henric Svanberg, BP’s Chairman. “It removes two significant legal risks and allows us to vigorously defend the company against the remaining civil claims.”

The settlement includes payments of nearly $2.4 billion to the National Fish and Wildlife Foundation, $350 million to the National Academy of Sciences and about $500 million to the Securities and Exchange Commission.

London-based BP PLC said in a statement that the settlement would not include civil claims under the Clean Water Act and other legislation, pending private civil claims and state claims for economic loss.